NICKEL DIMING YOUR REPUTATION TO DEATH

Posted in Airline Industry, Banking Industry, Business Crises of our own making, Business Crises We Create, Business Crisis Management, Crisis Management Consulting, Excessive consumer fees on December 1st, 2010 by mnayor

Whole industries have the ability to shoot themselves in the foot. Two that leap out at America daily are the airline industry and the banking industry. Single handedly, without help from anyone or anything else, they have made themselves the bad boys of American business. Could it be possible that no one in either of these industries has figured out that they were making themselves despised by the public? Could it be possible that no one in either industry can figure out how to be respected once again? The answer: so far, no.

There could not be one intelligent airline executive who believes that nickel-diming the public is a popular move – or even an acceptable move. But acceptability pales compared to the bottom line. If revenues are significantly enhanced, then the bottom line wins out. It’s certainly understandable that financial health is vital. Those who sit around the conference table and come up with the add-ons are most likely rewarded or at least singled out. But are they really doing what’s in the best interests of their companies?

Meals, pillows, blankets, luggage handling, preferred seating, bathroom use. You name it and it’s an additional charge. Who will be the corporate hero who says this is inane. Who will be the one who says we can gain a lot of goodwill by announcing the end of these charges? Who will be the one to say let’s add ten to twenty dollars to the cost of a ticket and be done with it. Let’s announce that we are back to being a full service airline. No food on short flights – OK. Smaller, simpler meals – OK. Not so many pillows and blankets to clutter the floor with – OK. Who will be the brave anti nickel-dimer?

But before you get to the airport for your aggravating trip, you first must go the bank for preliminary aggravation preparation. Use the ATM? Use your debit card and exceed your balance by 63 cents? Have a checking account you hardly use? A monthly service charge for the bank’s use of your money? Significant interest on your credit card balance? Not to worry. We’ve got you coming and going. The household name banks aren’t doing badly, thank you. Except that their success is on your back. Not quite the same as they’ve got your back.

Why rock the boat when revenues are flowing. Good enough question except it is perception and goodwill that suffer. Who is going to be the wunderkind of the banking world who steps up and says it’s time to stop? Let’s get back to being a bank. We’re supposed to lend money. We are supposed to be an important engine of the economy, not a parasite that just gorges on fees at the expense of our customers. Back to lending where we can make the same money by doing what (hopefully) we do best.

Being in an industry that, while competitive, still plays follow-the-leader often results in bad decisions that are followed blindly by the rest of the herd. Herd mentality can be dangerous. Oftentimes it takes advantage of the public. Oftentimes it undermines reputations as well. Alternatively, independent thinking can burnish images and can reap big rewards. Kudos to the big bank or the major airline that announces that it is separateing itself from the other guys.

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THE NEGATIVE PUBLICITY ENIGMA

Posted in Anticipating A Crisis, Business Crises of our own making, Business Crises We Create, Business Crisis Management, Corporate Crisis Management, Crisis Communication Strategy, Crisis Management, Crisis Mitigation, negative publicity on December 1st, 2010 by mnayor

Robert Walker wrote an article recently in the New York Times Magazine section entitled Good News, Bad News, about the negative publicity the GAP received over its attempt to change its iconic logo; and, in general, the fallout or lack thereof that can be expected from negative attacks.

He’s got a point. The old adage that any publicity, negative or positive, is good publicity is certainly not always true. But some forms of negative publicity don’t always do harm. Such is the case with the GAP logo fiasco.

What forms of negative publicity can hurt an organization? Clearly, reports of poor goods and/or services can be harmful. Reports of Johnson & Johnson’s tainted products over the last year have not helped its image. Reports of poor airline service have the effect of customers shopping for alternatives. A hotel devastated by a hurricane or earthquake or a terrorist incident has the same effect.

Stories about poor management will also turn customers off. Look at the banking and investment banking industry. All of these kinds of negative publicity have the effect of creating a crisis, and require skilled crisis management to counter the effects. The crisis management needed has to tackle two fronts: operationally to truly “fix” the problem and crisis communication to inform the public.

But there are other forms of negative publicity that don’t affect products, services or management, such as the GAP logo situation. True, some people were offended or reacted poorly to the proposed change, but what of it? It would take an extraordinarily sensitive GAP shopper or potential GAP shopper to boycott GAP because of this event.

A business crisis is one that effects a company’s reputation or bottom line. Did an unpopular proposed logo change genuinely affect GAP’s reputation? Did it affect the company’s bottom line? I think not. If it did, it was very short-lived and very ineffective. In fact, most stories about the incident stressed the many attributes about the business, its clothing products and its branding success. While GAP would most likely have opted for no publicity over its logo, no harm was done.

The moral of the story? Manage well. Provide excellent products and services. You may still be unable to avoid negative publicity or a crisis that is beyond your control but if your base is solid you will weather the storm.

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